I think you may try Yunnan instead. Indeed my friend in Australia asked me the same question by email, so I just copy and paste the answer here:
If you are going to spend ten days in Yunnan, I would suggest you to go backpacking to Kunming first, then:
Kunming - Dali Old Town - Heqin - back to Dali Old Town - Lijiang - Shuhe - then Tiger Leaping Gorge - Shangri-la (Zhongdian) - Diqin. From Diqin back to Lijiang and find your way out of Yunnan.
If you have more time, try to add something from the south, but these places are much less touristy and transportation is less convenient than the north part of Yunnan. For example: from Lijiang, go to Heqin - Dali - Weishan - Nanjian - Jingdong - Puning (near Pu'er) - Simao (they changed the name to Puer City) - Jinghong, there are some other areas around Jinghong.
I traveled in this area by bicycle with Oat in 2006, these are some of the places where I found very interesting small townish towns of southwestern China. But I don't know much about the travel facilities there, it may be difficult to go around without speaking or reading any Chinese. almost 9 years ago